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27 Cards in this Set

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Economics
the study of how we make decisions in a world twhere resources are limited.
Scarcity
It occurs when we do not have enough resources to produce all of the things we would like to have.
Example for scarcity
a rational person compares prices and makes choices based on his or her limited resources.
Describe the problem of What to Produce
WE may have to make a choice of using money to go to defense or producing services for those too ill to work.
Describle the issue of How to Produce
If we need oil to satisfy our living style, should we allow drilling in an Alaskan wildlife sanctuary?
Describe the issue of For Whom to Produce
Who gets the goods? What school benefits?
List the 3 'to Produce'
For whom
How
What
Economic Model
An economic model is a simplified version of the real world that represents how the economy works, or predict the status of the economy
Trade-Off
A Trade-Off is the alternative you face if you decide to do one thing rather than another.
Opportunity Cost
is the cost of the next best use of your time when you decide to do one thing rather than another.
Describe the issue of For Whom to Produce
Who gets the goods? What school benefits?
List the 3 'to Produce'
For whom
How
What
Economic Model
An economic model is a simplified version of the real world that represents how the economy works, or predict the status of the economy
Trade-Off
A Trade-Off is the alternative you face if you decide to do one thing rather than another.
Opportunity Cost
is the cost of the next best use of your time when you decide to do one thing rather than another.
Fixed Costs
expenses where the amoount of money used does not depend on how much goods are bought or produced
Variable Costs
expenses that change with the amount of items produced or bought
Total Costs
Fixed Costs + Variable Costs
Marginal Costs
the extra amount of money of producing one extra unit of output
Marginal Revenue
the change in total revenue- extra revenue- that results in selling one extra unit
Marginal Benefit
the extra benefit associated with an action
Cost- Benefit Analysis
an economic model the requires you to compare the marginal cost and marginal benefits of a decision
Market Economy
an economic system in which supply, demand, and prices help people make desicions and allocate resources
Free Enterprise
businesses are allowed to compete for profit with a minimum of government involvement.
Capitalism
where private citizens own most not all of the means or production
Incentives
rewards to influence you to take certain economic actions
Rational Choice
choosing the alternative that has the greatest value from among comparable products.